Check those junk drawers: RadioShack to pay full value of gift cards

This Tuesday, March 4, 2014, photo, shows Radio Shack store in downtown Cincinnati. RadioShack said it plans to close up to 1,100 stores in the U.S. and reported a wider quarterly loss after a disappointing holiday season. (AP Photo/Al Behrman)

WILMINGTON, Del. (AP) — RadioShack has reached a tentative settlement in a dispute over the treatment of gift card holders in the electronics retailer’s bankruptcy case.

Under a settlement outlined Wednesday, holders of roughly a third of the $46 million in outstanding gift cards would receive priority status and be paid in full.

Other holders of gift cards would be lumped in with general unsecured creditors, meaning they likely would receive pennies on the dollar, if anything.

The difference between the two groups depends on how they received their cards.

The agreement stems from a complaint filed by the Texas attorney general’s office, which is working with attorneys general in several states on behalf of RadioShack gift card holders.

“This is a victory for consumers in Texas and nationwide who spent their hard-earned dollars on these gift cards with full confidence that the company would honor them,” said Attorney General Ken Paxton. “I’m pleased that their voices were heard, and that, if approved next month by the bankruptcy court, they’ll get their money back with a minimum of bureaucratic red tape.”

An independent professional claims agent company will be approved by the Bankruptcy Court to review and process the claims. Consumers will have 12 months after RadioShack’s plan of liquidation goes into effect to file a simplified Proof of Claim form that will be available online or they can file their claim by mail if they prefer.

Merchandise Returns and certain promotional gift cards given away without consideration that do not qualify as “priority” claims under applicable bankruptcy law will be paid as general unsecured claims.

Attorneys for some gift card holders say they may still try to press their claims.

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